The dollar nudged up against major peers on Wednesday after weakening in the past three days with investors taking little risk ahead of U.S. inflation data which could shine some light on how fast the Federal Reserve might raise interest rates.
The U.S. consumer price index, due later on Wednesday, is predicted by a Reuters poll of economists to come in at an annualised 4.3%, versus the U.S Federal Reserve average annual 2% inflation target.
The Fed last week restated its belief that current high inflation is transitory but many investors fear that underestimating the rise in prices could prove a costly policy mistake.
“A lot is resting on this inflation being transitory. This will be the multi-trillion dollar question for 2022, thats for sure”, Deutsche Bank strategist Jim Reid said in his morning note to clients.
Data showed on Tuesday that U.S. producer prices increased solidly in October, driven by surging costs for gasoline and motor vehicle retailing, suggesting that high inflation could persist.
At 0850 GMT, the dollar index, which measures the greenback against six rivals, rose 0.19% to 94.146, after falling from a more than one-year peak of 94.634 reached on Friday.
Against Japans yen the greenback came off lows last seen since Oct. 11 and rose 0.18% to 113.080 yen.
The euro fell 0.23% to $1.1569.
Hammered last week after the Bank of England‘s surprise decision to keep rates unchanged, sterling retreated 0.18% to $1.3535 but stood well up Friday’s more than one-month low of $1.3425.
Fears of potential contagion from Chinas property market woes also fuelled the search for safer assets.
Chinas Evergrande faces a deadline on Wednesday to pay an offshore bond, and Kaisa Group pleaded on Tuesday for help to pay loans, workers and suppliers.
The Aussie briefly slid to $0.73525 but gradually limited its losses to a 0.07% fall.
New Zealands kiwi dropped 0.18% to $0.71170.
In cryptocurrencies, bitcoin hovered below the all-time high of $68,564.40 marked on Tuesday, last changing hands around $66,670.
Ether traded at $4,715.30, also staying within sight of Tuesdays record peak of $4,842.65.
(Reporting by Juliean Ponthus and Kevin Buckland; Editing by Gerry Doyle, Simon Cameron-Moore and Emelia Sithole-Matarise)
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